The “Government Consolidation Package” was approved by the Czech Chamber of Deputies in October 2023. How will changes affect employers, employees, freelancers or corporations? And what about the everyday life of people? Check out for more details.

Corporate Income Tax

Starting on January 2024, the corporate income tax rate will increase from 19 % to 21 %. It will no longer be possible to provide still wine as a tax-deductible advertising or promotional item up to 500 CZK. Only license fees and profit shares will be reported in the Notice of Income Paid Abroad as a part of all income exempt or not subject to taxation in the Czech Republic. The tax deductibility for the purchase of a new car for business purposes is limited to 2 million CZK.

Businesses that have the majority of their transactions in foreign currency will be able to keep their accounting in euros, US dollars or British pounds. Companies will now have the opportunity to not to tax unrealized exchange rate differences.

Personal income tax

The threshold for applying the 23 % personal income tax rate will be reduced from 48 times the average wage to 36 times the average wage in 2024 (1 554 948 CZK in average wages of 2nd Q 2023). A restriction on the exemption of income from the sale of a stock or a share of a company will be introduced upon meeting conditions to 40 million CZK. Besides other things, employers will get affected by canceling the kindergarten tax discount and the student tax discount, the tax discount to the spouse applicable only if taking care of children under 3 y/o or by reduction of the limit amount for exempting winnings from a lottery or raffle to 50 000 CZK.

Employee Benefits

For some tax benefits, an aggregate ceiling at the level of half of the average salary will be introduced. In 2024, benefits should not be subject to taxation up to the amount of 21 983 CZK which is a non-monetary bonus of a maximum of 1 832 CZK/month.

Value Added Tax will have two rates. The existing reduced rates of 10 and 15 percent will be combined to 12 percent. The base rate of 21 percent will remain. For example, VAT on food, housing and medical products is reduced from 15 to 12 percent. VAT on diapers, bottled water for babies, draught beer or energy drinks increased to 21 percent.

The Property Tax should be doubled.

The Excise Tax on tobacco will rise by 10 percent next year and will continue to increase by 5 percent/year. The excise tax on heated tobacco will rise regularly by 15 percent/year. This tax will be introduced for nicotine sachets and refills for e-cigarettes. The excise tax on alcohol is about to increase by 10 percent in the next 2 years and by 5 percent in the following year.

Starting on March 2024, the price of the road tax sticker will increase from 1 500 to 2 300 CZK. From 2025, the price will increase according to inflation. The possibility of a one-day stamp will be newly introduced.

The gambling tax rate for other gambling games (e.g., odds bets) is about to increase from 23 % to 30 %.

The recovery package also re-introduces the employee contribution to sickness insurance to 0.6 percent of income.

Two limits will be set for the contribution to social insurance for contactors who have a DPP agreements: 25 % of the average wage, if having only one employer, and 40 % of the average wage, if having multiple DPP at the same time for several employers.

The increase in contributions for the self-employed persons in the years 2024-2026 should increase the minimum assessment base for the social insurance of the self-employed from 25 % to 40 % of the average salary.